Be on the Lookout! Bubblebustin to be on CBC The National- on the #TransitionTax

189 thoughts on “Be on the Lookout! Bubblebustin to be on CBC The National- on the #TransitionTax”

1. It seems to me that one of the difficulties about raising awareness of the CBT situation is that as Calgary says (above) it’s too complicated for the sound-bite-driven media industry.

   CBT is totally unfair. / But CBT can’t be enforced if the USC doesn’t file.

   Other governments do nothing to help. / But other governments won’t collect from their own citizens. / But will hand over their citizens’ bank records. / But the IRS doesn’t use FATCA records to enforce CBT compliance. / But they are using FATCA records to track contributions to non-US retirement plans in order to build a database on expats’ non-US investments.

   Through tax treaties and FATCA, other governments impose US extraterritorial law on their own citizens. / But not complying US tax law is perfectly legal when not in the US. / But puts a dual citizen at risk if visiting the US – where they have no right to consular assistance.

   CBT can’t be enforced. / But CBT forever criminalises those with a US birthplace.

   Difficult to convey the complexity of the whole mess. And all too easy for readers/viewers to take away the message that fits with their preconceptions, rather than being brought to challenge those preconceptions.

2. On the other hand, setting out the full situation gets so lengthy it ends up on ssrn, read only by tax geeks and desperate USCs.

   Fabien Lehagre and the AA collective seems to have put accidental Americans on the French government’s agenda, by speaking only of and for one very specific subgroup: those who have no real US connection and just want to renounce without impediment and without paying exorbitant fees or being treated like criminals.

   In a somewhat similar way, a campaign has formed to represent specifically those who have been complying and want to continue complying without being forced into bankruptcy by the transition tax. And has had some success, in that the USG has taken notice.

   Maybe separate campaigns is the most effective way?

3. A new CBC article on this topic this morning.

   Trudeau government should help those hit by Trump tax: MPs, Rosemary Barton.

   It was the lead article on the CBC News site when I clicked on the site a few minutes ago as I do every morning, in the really large box at the top of the page. Good article with some positive remarks from NDP MP Murray Rankin and Conservative MP Pat Kelly, such as:

   Murray Rankin, MP: “This is destroying the retirement plans of many Canadians who have used these corporations, often as part of their tax planning for their retirement. Canada should do more than simply say, ‘Isn’t this terrible.’ . . . ”
   Pat Kelly, MP:. “If there are consequences of this tax reform bill — whether they are intended or not — on Canadian citizens then our government has a duty and a responsibility to ensure that they act accordingly and deal with this.”

   But the comments (75 so far) are similar to those on the previous article, real idiots who think stuff like it’s about US residents having registered US-based corporations in Canada to evade US tax and other erroneous stuff that doesn’t even make sense.

4. Excellent! Congratulations, BB.

5. Lawrence Ferlinghetti decades ago wrote and it gives me chills to read it today:
   “Pity the nation whose people are sheep,
   and whose shepherds mislead them.
   Pity the nation whose leaders are liars, whose sages are silenced,
   and whose bigots haunt the airwaves.
   Pity the nation that raises not its voice,
   except to praise conquerors and acclaim the bully as hero
   and aims to rule the world with force and by torture.
   Pity the nation that knows no other language but its own
   and no other culture but its own.
   Pity the nation whose breath is money
   and sleeps the sleep of the too well fed.
   Pity the nation — oh, pity the people who allow their rights to erode
   and their freedoms to be washed away.
   My country, tears of thee, sweet land of liberty.”
   ― Lawrence Ferlinghetti
   

6. Thanks plaxy.

   The usual “pack of hyenas” are commenting on the CBC article Pacifica posted.

   Clearly they hate Americans, dual citizens and corporations in general. Apparently we aren’t even Canadians even though we live in Canada, employ Canadians and contribute to the Canadian tax base.

7. The new article drives home my point that journalists need to ensure that the victims are portrayed as Canadians first. Murray Rankin (NDP) phrased it properly, but the Conservative talked of residents, “many of whom have Canadian as well as U.S. citizenship.”

   As I glanced in weary horror at the comments and saw the usual “pick a citizenship” idiocy it occurred to me that the old “Canadians of convenience” episode (the exaggerated outrage concerning the evacuation of dual citizens from Lebanon in 2006) has left deep roots in public discourse. There’s a lingering distrust of dual citizenship.

8. The changing status of citizenship (in many countries, not just the US) puts dual citizens in a difficult position.

   Having two citizenships used to seem valuable – especially if one of the citizenships was US.

   As a result of learning about CBT, and America’s instrumentalist use of its “expats” as a conduit for importing capital, the significance of dual citizenship, to me, is now the vulnerability. No right to consular protection while in the other country. Vulnerable to obligations imposed by the other country, but lacking the rights available to non-expats. Vulnerable to punishments imposed by the residence country as the residence country government tries to protect itself from the threat posed by the other country of citizenship.

   I wouldn’t put myself in that position again, in this increasingly uncertain international environment.

9. Sid – amen!

10. BB: Here’s what I just sent to Minister Freeland. Will reword it for Minister Morneau. Hope you can use it.

    Dear Minister Freeland,

    You are undoubtedly aware of the financial crisis that has befallen a significant sector of Canada’s population, namely the community of American-Canadians. While Mr. Trudeau is working hard to remove the “hyphen” as applied to most other “ethnic” or “national-origin” groups in Canada, those who hail from the United States and have made their home here (often for many decades) are still prisoners of the “hyphen” because of the unique-unto-itself citizenship-based income tax law of the United States.

    This American law has been allowed free rein here in Canada ever since the adoption in 2014 of the Intergovernmental Agreement implementing the US Foreign Account Tax Compliance Act in Canada. Our community warned the government of the day (Harper’s) about the consequences of entering into that Agreement but our voices went unheeded resulting in the reporting by the Canada Revenue Agency of over 300,000 Canadian bank accounts to the IRS over the past two years, as well as the departure of thousands of dollars from those accounts to the United States Treasury from Canadian citizens and permanent residents who have been forced to pay a “ransom” to be released from their future US tax obligations. The Canadian government has stood silently by and not only watched it happen but participated in its execution.

    Recent developments have now made an inexcusable situation an absolute emergency. In the waning weeks of 2017 the Trump administration enacted sweeping tax reform. Far from fulfilling its 2016 election platform promise to abandon its citizenship-based system in favour of the residence-based international standard, it instead adopted the Transition Tax for corporations for the purpose of repatriating revenues from businesses owned by “US Persons” outside the United States.
    Meant to be targeted at enormous corporations, the wording of the law actually encompasses ALL incorporated entities, no matter the size, the tax to be paid by all owners who are deemed to be American citizens.

    About a million people in Canada hold American citizenship (which is surprisingly easy to acquire and extremely difficult and costly to be rid of). Like other Canadians, a sizeable number of these certainly own and operate their own businesses. The new tax is due and payable, on company profits going back to 1986 (!!), on June 15 of this year. Affected individuals may elect to pay what they “owe” over the next eight years but the first payment must be made in 2018.

    This new law will certainly ruin many Canadian businesses and the families that run them. The only reason the new law has the power to do so is because of United States citizenship-based taxation. As long as this practice is condoned by the Canadian government, Canada will have its economy looted annually and its citizens impoverished by the United States.

    The actions of the Harper government, and the subsequent inaction of the Trudeau government have put the financial future of a significant number of Canadians in great peril. I ask you to use the full weight of your power and influence as Minister of Foreign Affairs to bring this terrible situation to an end. I ask you to band together with your colleagues and make it possible for American-Canadians to be just as hyphen-less as everybody else.

    Sincerely,
    [name withheld]

11. The comments on the CBC article are shocking. How can people be so incredibly stupid?

    Mind you it would help if this was made Crystal clear that this is about Canadians living in Canada.

12. Here’s my letter, which I will send to all of the addresses plus my MP in the next hour, once I have another coffee and do an editing pass:

    I have followed with some concern the matter of “transition tax” on retained earnings imposed by the US government as part of the Tax Cuts and Jobs Act. This story received little attention in Canada until the CBC began reporting on it this week.

    I would like to request that the Canadian government take immediate measures to ensure that the savings of Canadians kept within corporations are protected from American taxation. As you must know, this could potentially impact many Canadians. Some are immigrants from the US who have naturalized, but many have dual citizenship through no fault of their own, either born in the US to Canadian parents, or born in Canada to a parent with US citizenship – the so-called Accidental Americans. These people deserve relief.

    I understand from the CBC coverage that the Ministry of Finance is studying the issue, and possibly pursuing a remedy under the tax treaty, but that this process could take months. Unfortunately, Canadians with US citizenship who file US taxes will need to consider making payments very soon. They may not think it’s fair, but their lawyers and accountants will urge them to err on the side of caution. This will result in not only the loss of individual retirement savings, but also a loss of capital from Canada.

    Therefore I would request that the Finance Minister immediately make a public statement that, first, relief is being sought under the Canada-US tax treaty and, second, that under the current terms of the tax treaty, the CRA will not assist the IRS in the collection of any tax debts owed to the US by Canadian citizens.

    In 2011, when the story of US extraterritorial taxation hit the headlines in Canada following the Imposition of FATCA reporting requirements on banks, potentially putting the savings of Canadian dual citizens at risk, the late Jim Flaherty, Minister of Finance, took steps. He publicly stated that Canada would not collect FBAR fines on behalf of the US. He published a letter in American newspapers (http://business.financialpost.com/news/read-jim-flahertys-letter-on-americans-in-canada). In a private letter to a concerned Canadian, he stated:

    Please be aware, we have been clear that penalties imposed by the IRS under FBAR will not be collected by the Canada Revenue Agency (CRA) on their behalf. While the Canada-United States Income Tax Convention contains a provision that allows for the collection by a country of taxes imposed by the other country, this does not apply to penalties imposed under laws that impose only a reporting requirement. Furthermore, the CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose (whether or not the individual was also a U.S. citizen at the time). (https://expatsinca.wordpress.com/2011/11/04/encouraging-letter-from-finance-minister-jim-flaherty/)

    Minister Flaherty’s assurances did a great deal to calm the fears of Canadians who worried that their savings would robbed by predatory US taxation. I think it’s high time that Minister Morneau showed the same courage and concern by making a similar statement.

13. @ Nononymous,

    Re:

    The new article drives home my point that journalists need to ensure that the victims are portrayed as Canadians first. Murray Rankin (NDP) phrased it properly, but the Conservative talked of residents, ‘many of whom have Canadian as well as U.S. citizenship.’

    I saw that as well, but am not sure if those are the words of the Conservative MP or of the article’s author, as they do not appear within quotation marks in the article:

    Conservative revenue critic Pat Kelly called on the government to protect the interests of those being hit by Trump’s tax reform, many of whom have Canadian as well as U.S. citizenship.

    whereas other comments by MP Kelly in the article are in quotation marks.

    I like your comment, though. I definitely agree it’s critically important that people realise these victims are Canadians and that the money involved was made in Canada. I particularly like that MP Murray Rankin, NDP, pointed out “This is destroying the retirement plans of many Canadians who have used these corporations, often as part of their tax planning for their retirement”,

14. How very kind of you EmBee to remember my dear Barclay, gone too soon. I always thought it was so ironic when we found out that he too was born in Detroit.
    You are a woman of many talents and it is always wonderful to hear from you.Thanks for brightening my day. I was having a difficult time dealing with the callous ignorant comments we saw at CBC. Alas, little changes, but we continue to try to champion our cause.

15. @Mike: I’m also aghast at the depths of ignorance and seething hatred in those comments. Especially at the implication that most if not all dual citizens are wealthy. Real torches-and-pitchforks going on over there.

    I have entered the queue for renunciation in Ottawa, hope to have an appointment shortly.

16. Maybe invoking the ghost of Jim Flaherty will shame them into action. One can but hope.

17. There, sent. I also included Murray Rankin and Pat Kelly, the NDP and Conservative critics quoted in the second CBC article. Murray.Rankin@parl.gc.ca and pat.kelly@parl.g.ca.

    If this results in a CRA audit of my tax returns I’ll be pissed…

18. Thank you for sharing your letter here, Nononymous.

    Indeed invoking the ghost of Jim Flaherty should (but will it?) shame the Canadian government into action for he was not afraid to stand up for those in Canada to be affected by FATCA in 2011 with his reminder of the terms of the US / Canada Tax Treaty. Unfortunately (though he did change his description of *us* and told us that as USC’s we needed to take our problems to the US government – and then he died) as Ginny pointed out, *James Flaherty is still dead*. (It is so wonderful to get her wise take on this — good health to you Ginny, and thanks!)

    It seems to me that those *real Canadians* (the ones for whom the words *A Canadian is A Canadian is A Canadian* was spoken) commenting on the CBC articles have the assumption that what is being asked for is financial reimbursement to victims of the new retroactive to 1986 and confiscatory (not just to USC’s who are being forced to pay this tax but also to the very country of Canada in *theft* of its financial resources) US transition tax. We cannot expect them to understand what it took many of us so long to understand re our *deemed* or otherwise defined US citizenship consequences with US CBT. Theirs is indeed knee-jerk reaction but their hatred is real, as BB pointed out…

    Clearly they hate Americans, dual citizens and corporations in general. Apparently we aren’t even Canadians even though we live in Canada, employ Canadians and contribute to the Canadian tax base.

    As one other warrior said in the fight re FATCA as she spoke to the Canadian Senate Finance Committee when Conservative Mike Allen said *(US) Congress has spoken*,

    We want Canada to go back to US Treasury and say *Parliament has spoken*.

    That is the kind of Canadian government action we are asking for.

19. Amen. Amen, sid and plaxy.

20. Reading only a small sampling of the CBC comments was all I could take. Its appalling how many of those idiots seem to:

    1. Hate anyone who has managed to save for their retirement. “Rich, whiny, corporate bastards”.
    2. Hate anyone who immigrated from the US, even though that event happened decades ago, totally ignoring the fact that they have been passport carrying, tax paying loyal Canadians ever since. “Americans living in Canada who are also Canadian citizens”.
    3. Hate the CBC for attempting to portray affected Canadians in a somewhat favorable light…..”fake news”.
    4. Think its perfectly OK and normal for the US to ferret out US expats around the globe, shake them down, and rob other countries’ wealth in the process. “Just shut up and pay your fair share”.
    5. Think shedding US citizenship is easily accomplished. “If you don’t like it, just renounce”.
    6. Think owning a small corporation somehow equates to tax evasion and should be illegal. “The government should put a stop to this”.
    7. Think the US has a right to pass any tax law it wants to pass and then by some failure of logic think the Canadian government is obliged to aid and abet this larceny inside of Canada. “Congress has spoken”.

    God help us if a Trump-like figure were to ever emerge on the Canadian political scene. These morons would happily turn out in force, get him elected, and turn Canada into a cesspool just like the US.

21. i do have a incorporated company and have had one since 1996. it was set up as a not for profit entity and i have never taken a pay check from it.

    in speaking to my accountant last night about this latest u.s. move he said “well this is a bit of a game changer”

    and i said “how so”

    he said “it will impact you all the way back to day one of the company and we will be sending most of the remaining funds in it south”

    I said “no we won’t we have never filed american taxes nor will we ever file american taxes”

    he said “good point. so i should do nothing then?”

    me “yup. lets go have a beer and enjoy the sunny afternoon here on the west coast” which is exactly what we did

    i have been here since 1966 and a canadian citizen since 1980. the americans have no idea who or where i am and i certainly will not aid and abett them by painting a bulls eye on my back

    if they really really want me come find me cause i will not make it easy on them

22. Now more than ever, people need to think twice and seriously consider their situation before entering the tax system.

    And the disgusting comments on the most recent CBC article? Absolutely disgusting! Mostly Canadians too. We are a mean spirited, sadistic people.

23. Mettleman, your latest words and actions / example (of not complying proving safer all around than for those who have tried and continue to try to comply) are like music to some. (Contrary to compliance condor-talk here and even our spineless government’s same sentiment, *the law is the law is the law*, another American from the past should often be quoted as he was the wiser.

    

24. Mettleman – hear hear! And cheers to your accountant too!

25. My letter to my MP

    Some time ago I wrote to you about FATCA and the IGA between Canada and the US (IRS) . I hand delivered this to one of your assistants during a meeting on physician assisted dying at the West Vancouver library. I never did get a response, which was rather disappointing. I put it down to your new job.

    As you well know by now, the IGAs were never ratified by the US congress and there has been no meaningful reciprocity. Canada gave up some of its sovereignty at the behest of the big banks. The IGA is up for review but I suspect nothing will be done.

    That was bad enough and warranted action but the situation is suddenly much much worse. As a result of the ‘Trump tax cuts’ hundreds or perhaps thousands of Canadian citizens will have their pension savings directly attacked by the US treasury.

    This new law imposes a transition tax of 17% of the retained earnings of private Canadian corporations- all to be paid by June 15 1918.

    It is important to note the following;

    1 The tax is retroactive and came with no warning.
    2 Private Canadian corporations were encouraged by your and previous governments as a means to ‘create ‘ jobs and to save for retirement.
    3 There will be no offset or credit- resulting in double taxation.
    4 There will be a transfer of capital from Canada to the US.
    5 This American law was passed in haste and it is clear small business owners living and working in Canada were not the intended target.
    6 The accounting burden alone is prohibitive for small business owners.

    Very quickly, we need a statement, similar to Mr. Flaherty’s statement concerning FATCA, that the CRA will not collect taxes or penalties on behalf of the IRS from Canadians and that relief is on the way via the tax treaty.